Three top trends for investors in Africa: The markets to watch

The effects of the Covid-19 pandemic have left many markets reeling, yet in Africa, there are some bright spots, says CM Trading. Lockdowns and remote working have changed the economic landscape and challenged businesses and their clients to adapt. A big area of change is the money market as countries throughout Africa push ahead towards a cashless continent. 

As mobile penetration increases and digital payment methods become more accessible, this has triggered a scramble for control of the mobile money market and the industry that supports it. 

CM Trading shares some of the trends investors should be watching in 2021. 

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•  Billions pour into fintech 

In Africa, fintech funding and mergers & acquistions grew to $1.35bn in 2020, according to a report by BFA Global’s Catalyst Fund and Briter Bridges, published in May 2021.  

The report, which surveyed 177 start-ups and 33 investors on the continent, found that most of the investment flowed into Nigeria, Kenya and SA. This has resulted in the rise of companies hoping to take advantage of the growing trend towards digital payments and e-commerce. 

Yoco, OPay, PalmPay are some of the African companies that have attracted huge investment in the continent’s fintech industry. Overall, Africa has experienced a surge in mobile money solutions, but more on that later. 

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• Cryptocurrency 

Though the crypto king, bitcoin, has dropped in price in the past month, it should be noted that the cryptocurrency rose from a low of $9,400 in May 2020 to a record high of $64,000 in April.  

A lot of attention has been focused on the crypto markets, as alt-coins such as ethereum and ripple have all increased in value. Even dogecoin, which started as a meme, has become a fully fledged cryptocurrency.  

Emerging cryptocurrencies are catching the attention of African investors, regardless of the market’s inherent volatility, as the profit potential is enormous.  

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• Mobile money revolution  

The African banking industry is undergoing a radical transformation, spurred on by increasing access and demand for digital services. Innovations in digital payment methods are pushing African consumers towards decentralised finance, a situation that has many banking institutions worried. 

The Africa CEO Forum reported that 70% of Africa’s financial institutions reported shifting towards the digitisation of their businesses due to the pandemic. Nigeria has seen a 500% increase in online payments in 2019, reports the Nigeria Inter-bank Settlement Scheme.  

Why are mobile money accounts important? According to a McKinsey study, about two-billion people and 200-million businesses lack access to formal savings and credit. For investors, this is an area to watch, especially as bitcoin becomes normalised for payments in African countries such as Nigeria. 

Want to take advantage of these trends? 

If you want become a trader but unsure which steps to take, CM Trading is hosting a series of in-person seminars in Africa. The next Trading Masterclass is headed to Joburg on July 3.

CM Trading specialist Tyron Griffiths says: “Get your trading journey off to the right start with a trusted broker that offers full training and dedicated support. Having support from a locally based, international broker will kick-start your trading career.  

Click here to reserve your seat >>>

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This article was paid for by CM Trading.